LifeVantage Announces Financial Results for the Third Quarter of Fiscal 2022

Rhea-AI Summary

LifeVantage Corporation (Nasdaq: LFVN) reported Q3 FY2022 results with revenues of $50.0 million, a 3.0% year-over-year decline. Total active accounts decreased by 6.5% to 157,000. Earnings per diluted share fell to $0.09 from $0.12 a year ago. The company announced a quarterly dividend of $0.03 per share. Adjusted EBITDA decreased 29.2% to $3.4 million. Fiscal 2022 revenue guidance was lowered to $204-$207 million from $212-$220 million, while adjusted EBITDA guidance was also reduced to $15 million from $18-$20 million.

Positive

• Initiation of a quarterly dividend of $0.03 per common share.
• Strong balance sheet with $17.8 million in cash and no debt.
• Active accounts in Asia/Pacific & Europe grew by 4.3%.

Negative

• Revenue declined 3.0% YoY with a notable 8.2% drop in the Americas.
• Adjusted EBITDA fell by 29.2% compared to the previous year.
• Guidance for revenue and adjusted EBITDA for FY2022 was lowered.

Initiates first quarterly dividend of $0.03 per common share

SALT LAKE CITY, May 03, 2022 (GLOBE NEWSWIRE) -- LifeVantage Corporation (Nasdaq: LFVN) today reported financial results for its third fiscal quarter ended March 31, 2022. The Company also announced the initiation of a quarterly dividend of $0.03 per common share.

Third Quarter Fiscal 2022 Summary*:

• Revenue of $50.0 million, a decrease of 3.0% from the prior year period. Excluding the negative impact of foreign currency fluctuations, third quarter revenue was down less than 1%;
  
• Total active accounts declined 6.5% from the prior year period to 157,000 as growth of 4.3% in Asia/Pacific & Europe was more than offset by declines of 10.7% in the Americas;
  
• Earnings per diluted share were $0.09, versus $0.12 a year ago;
• Adjusted earnings per diluted share were $0.12, versus $0.20 a year ago;
• Adjusted EBITDA of $3.4 million, a decrease of 29.2% from the prior period;
• Repurchased approximately 326,000 shares; and
• Strong balance sheet with $17.8 million of cash and no debt.

* All comparisons are on a year over year basis and compare the third quarter of fiscal 2022 to the third quarter of fiscal 2021, unless otherwise noted.

“Activity levels improved in the third quarter but remained challenged. We are encouraged by recent trends and continue to expect that our ongoing efforts to transform our business will lead to accelerating sales and earnings growth in the future,” said Steve Fife, Chief Executive Officer of LifeVantage. “Based on our strong balance sheet and positive long-term outlook, we have initiated a quarterly dividend of $0.03, underscoring our confidence in our business model to deliver strong results and increase shareholder value. I’m pleased with our early progress on key initiatives aimed at strengthening the alignment between product development and marketing as well as the evolution of our digital strategy. We are advancing our customer-focused narrative with sharper messaging and proprietary digital tools, improving experiences across the lifecycle of engagement and helping drive stronger outcomes for all stakeholders.”

Third Quarter Fiscal 2022 Results

For the third fiscal quarter, the Company reported revenue of $50.0 million, a 3.0% decrease compared to the third quarter of fiscal 2021. Excluding the negative impact of foreign currency fluctuations, third quarter revenue was down less than 1%. Revenue in the Americas decreased 8.2% compared to the prior year period and was partially offset by gains in Asia/Pacific & Europe where revenue increased 9.3%. Hosting in-person meetings continues to pose a challenge in certain markets but the Company remains committed to providing digital tools and support to distributors.

Gross profit for the third quarter of fiscal 2022 was $40.3 million, or 80.7% of revenue, compared to $42.8 million, or 82.9% of revenue, for the same period in fiscal 2021. The decline in gross profit margin was due to increased inventory obsolescence costs, higher shipping expenses, and mix shifts related to product and geography.

Commissions and incentives expense for the third quarter of fiscal 2022 was $23.2 million, or 46.4% of revenue, compared to $25.2 million, or 48.8% of revenue, for the same period in fiscal 2021. The decrease in commissions and incentives expense as a percentage of revenue reflects the timing and magnitude of incentive and promotional programs.

Selling, general and administrative (SG&A) expense for the third quarter of fiscal 2022 was $15.3 million, or 30.6% of revenue, compared to $15.5 million, or 30.1% of revenue, for the same period in fiscal 2021. Adjusted for nonrecurring expenses, which are detailed in the GAAP to non-GAAP reconciliation tables included at the end of this press release, adjusted non-GAAP SG&A expenses for the third quarter of fiscal 2022 were $14.7 million, or 29.3% of revenue, compared to adjusted non-GAAP SG&A expenses for the third quarter of fiscal 2021 of $14.4 million, or 27.9% of revenue.

Operating income for the third quarter of fiscal 2022 was $1.8 million compared to operating income of $2.1 million for the third quarter of fiscal 2021. Accounting for non-GAAP adjustments noted previously, adjusted non-GAAP operating income for the third quarter of fiscal 2022 was $2.5 million compared to $3.2 million for the third quarter of fiscal 2021.

Net income for the third quarter of fiscal 2022 was $1.1 million, or $0.09 per diluted share, which compares to net income of $1.7 million, or $0.12 per diluted share for the third quarter of fiscal 2021. Accounting for non-GAAP adjustments noted previously, net of tax, adjusted non-GAAP net income for the third quarter of fiscal 2022 was $1.6 million, or $0.12 per diluted share, compared to $2.8 million, or $0.20 per diluted share for the third quarter of fiscal 2021.

Adjusted EBITDA was $3.4 million for the third quarter of fiscal 2022, compared to $4.8 million for the comparable period in fiscal 2021.

Balance Sheet & Liquidity

The Company generated $5.2 million of cash from operations during the first nine months of fiscal 2022 compared to $7.9 million in the same period in fiscal 2021. Cash and cash equivalents at March 31, 2022 were $17.8 million, compared to $23.2 million at June 30, 2021 and there was no debt outstanding. During the third quarter of fiscal 2022, the Company repurchased approximately 0.3 million common shares for $1.7 million under its share repurchase program. During the nine months ended March 31, 2022, the Company repurchased 1.2 million common shares for $8.4 million under its share repurchase program.

Dividend Announcement

Today the Company announced the declaration of a cash dividend of $0.03 per common share. The dividend will be paid on May 31, 2022 to all stockholders of record at the close of business on May 17, 2022.

Fiscal Year 2022 Guidance

The Company is reducing its guidance for fiscal 2022 to reflect results in the third quarter. Revenue for fiscal 2022 is now expected to be in the range of $204 million to $207 million compared to previous guidance of $212 million to $220 million. Adjusted EBITDA for fiscal 2022 is now expected to be in the range of approximately $15 million compared to previous guidance of $18 million to $20 million. Adjusted earnings per share are now expected to be in the range of $0.52 to $0.56 compared to previous guidance of $0.67 to $0.71, which assumes a full year tax rate of approximately 23%. This guidance reflects the current trends in the business. The Company's guidance for adjusted non-GAAP EBITDA and adjusted non-GAAP earnings per diluted share excludes any non-operating or non-recurring expenses that may materialize during fiscal 2022. The Company is not providing guidance for GAAP earnings per diluted share for fiscal 2022 due to the potential occurrence of one or more non-operating, one-time expenses, which the Company does not believe it can reliably predict.

Conference Call Information

The Company will hold an investor conference call today at 2:30 p.m. MST (4:30 p.m. EST). Investors interested in participating in the live call can dial (877) 704-4453 from the U.S. International callers can dial (201) 389-0920. A telephone replay will be available approximately two hours after the call concludes and will be available through Tuesday, May 10, 2022, by dialing (844) 512-2921 from the U.S. and entering confirmation code 13728413, or (412) 317-6671 from international locations, and entering the confirmation code 13728413.

There will also be a simultaneous, live webcast available on the Investor Relations section of the Company's web site at http://investor.lifevantage.com/events-and-presentations or directly at here. The webcast will be archived for approximately 30 days.

About LifeVantage Corporation

LifeVantage Corporation (Nasdaq: LFVN) is a pioneer in nutrigenomics, the study of how nutrition and naturally occurring compounds affect human genes to support good health. The Company engages in the identification, research, development, formulation and sale of advanced nutrigenomic activators, dietary supplements, nootropics, pre- and pro-biotics, weight management, skin and hair care, bath & body, and targeted relief products. The Company’s line of scientifically-validated dietary supplements includes its flagship Protandim^® family of products, LifeVantage^® Omega+^™, ProBio^™, IC Bright^™, and Daily Wellness^™ dietary supplements, TrueScience^® is the Company's line of skin, hair, bath & body, and targeted relief products. The Company also markets and sells Petandim^®, its companion pet supplement formulated to combat oxidative stress in dogs, Axio^® its nootropic energy drink mixes, and PhysIQ^™, its smart weight management system. LifeVantage was founded in 2003 and is headquartered in Lehi, Utah. For more information, visit www.lifevantage.com.

Cautionary Note Regarding Forward Looking Statements

This document contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words and expressions reflecting optimism, satisfaction or disappointment with current prospects, as well as words such as "believe," "will," "hopes," "intends," "estimates," "expects," "projects," "plans," "anticipates," "look forward to," "goal," “may be,” and variations thereof, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking. Examples of forward-looking statements include, but are not limited to, statements we make regarding executing against and the benefits of our key initiatives, future growth, including geographic and product expansion, the impact of COVID-19 on our business, expected financial performance and expected dividend payments in future quarters. Such forward-looking statements are not guarantees of performance and the Company's actual results could differ materially from those contained in such statements. These forward-looking statements are based on the Company's current expectations and beliefs concerning future events affecting the Company and involve known and unknown risks and uncertainties that may cause the Company's actual results or outcomes to be materially different from those anticipated and discussed herein. These risks and uncertainties include, among others, further deterioration to the global economic and operating environments as a result of future COVID-19 developments, as well as those discussed in greater detail in the Company's Annual Report on Form 10-K and the Company's Quarterly Report on Form 10-Q under the caption "Risk Factors," and in other documents filed by the Company from time to time with the Securities and Exchange Commission. The Company cautions investors not to place undue reliance on the forward-looking statements contained in this document. All forward-looking statements are based on information currently available to the Company on the date hereof, and the Company undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after the date of this document, except as required by law.

About Non-GAAP Financial Measures

We define Non-GAAP EBITDA as earnings before interest expense, income taxes, depreciation and amortization and Non-GAAP Adjusted EBITDA as earnings before interest expense, income taxes, depreciation and amortization, stock compensation expense, other income, net, and certain other adjustments. Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. We define Non-GAAP Net Income as GAAP net income less certain tax adjusted non-recurring one-time expenses incurred during the period and Non-GAAP Earnings per Share as Non-GAAP Net Income divided by weighted-average shares outstanding.

We are presenting Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Earnings Per Share because management believes that they provide additional ways to view our operations when considered with both our GAAP results and the reconciliation to net income, which we believe provides a more complete understanding of our business than could be obtained absent this disclosure. Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Earnings Per Share are presented solely as supplemental disclosure because: (i) we believe these measures are a useful tool for investors to assess the operating performance of the business without the effect of these items; (ii) we believe that investors will find this data useful in assessing shareholder value; and (iii) we use Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Earnings Per Share internally as benchmarks to evaluate our operating performance or compare our performance to that of our competitors. The use of Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Earnings per Share has limitations and you should not consider these measures in isolation from or as an alternative to the relevant GAAP measure of net income prepared in accordance with GAAP, or as a measure of profitability or liquidity.

The tables set forth below present reconciliations of Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Earnings per Share, which are non-GAAP financial measures to Net Income and Earnings per Share, our most directly comparable financial measures presented in accordance with GAAP.

Investor Relations Contacts:

Reed Anderson, ICR
(646) 277-1260
reed.anderson@icrinc.com

LIFEVANTAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share data)	March 31, 2022				June 30, 2021
ASSETS
Current assets
Cash and cash equivalents	$	17,796			$	23,174
Accounts receivable		2,798				2,925
Income tax receivable		805				1,038
Inventory, net		16,276				16,145
Prepaid expenses and other		7,383				4,772
Total current assets		45,058				48,054
Property and equipment, net		10,035				11,123
Right-of-use assets		11,760				13,700
Intangible assets, net		620				719
Deferred income tax asset		1,077				1,208
Equity securities		2,205				2,205
Other long-term assets		1,460				1,723
TOTAL ASSETS	$	72,215			$	78,732
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	6,533			$	6,744
Commissions payable		7,255				8,138
Income tax payable		78				830
Lease liabilities		2,688				2,151
Other accrued expenses		7,054				7,336
Total current liabilities		23,608				25,199
Long-term lease liabilities		13,876				16,032
Other long-term liabilities		700				694
Total liabilities		38,184				41,925
Commitments and contingencies
Stockholders' equity
Preferred stock — par value $0.0001 per share, 5,000 shares authorized, no shares issued or outstanding		—				—
Common stock — par value $0.0001 per share, 40,000 shares authorized and 12,577 and 13,609 issued and outstanding as of March 31, 2022 and June 30, 2021, respectively		1				1
Additional paid-in capital		130,714				129,048
Accumulated deficit		(96,184	)			(92,346	)
Accumulated other comprehensive (loss) income		(500	)			104
Total stockholders’ equity		34,031				36,807
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	72,215			$	78,732

LIFEVANTAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
	Three Months Ended March 31,								Nine Months Ended March 31,
(In thousands, except per share data)	2022				2021				2022				2021
Revenue, net	$	50,004			$	51,570			$	155,418			$	165,405
Cost of sales		9,657				8,818				28,765				28,404
Gross profit		40,347				42,752				126,653				137,001
Operating expenses:
Commissions and incentives		23,206				25,154				72,760				77,939
Selling, general and administrative		15,316				15,510				47,813				48,027
Total operating expenses		38,522				40,664				120,573				125,966
Operating income		1,825				2,088				6,080				11,035
Other expense:
Interest expense, net		(5	)			(2	)			(10	)			(17	)
Other expense, net		(69	)			(255	)			(385	)			(263	)
Total other expense		(74	)			(257	)			(395	)			(280	)
Income before income taxes		1,751				1,831				5,685				10,755
Income tax expense		(610	)			(107	)			(1,149	)			(2,768	)
Net income	$	1,141			$	1,724			$	4,536			$	7,987
Net income per share:
Basic	$	0.09			$	0.12			$	0.34			$	0.56
Diluted	$	0.09			$	0.12			$	0.34			$	0.55
Weighted-average shares outstanding:
Basic		13,195				14,071				13,261				14,175
Diluted		13,257				14,212				13,312				14,420

LIFEVANTAGE CORPORATION AND SUBSIDIARIES
	Revenue by Region
	(Unaudited)
	Three Months Ended March 31,												Nine Months Ended March 31,
(In thousands)	2022						2021						2022							2021
Americas	$	33,444		67	%		$	36,421		71	%		$	104,600			67	%		$	116,979		71	%
Asia/Pacific & Europe		16,560		33	%			15,149		29	%			50,818			33	%			48,426		29	%
Total	$	50,004		100	%		$	51,570		100	%		$	155,418			100	%		$	165,405		100	%
	Active Accounts
	(Unaudited)
	As of March 31,
	2022						2021						Change from Prior Year				Percent Change
Active Independent Distributors(1)
Americas		38,000		61	%			42,000		67	%			(4,000	)		(9.5	)%
Asia/Pacific & Europe		24,000		39	%			21,000		33	%			3,000			14	%
Total Active Independent Distributors		62,000		100	%			63,000		100	%			(1,000	)		(1.6	)%
Active Customers(2)
Americas		70,000		74	%			79,000		75	%			(9,000	)		(11.4	)%
Asia/Pacific & Europe		25,000		26	%			26,000		25	%			(1,000	)		(3.8	)%
Total Active Customers		95,000		100	%			105,000		100	%			(10,000	)		(9.5	)%
Active Accounts(3)
Americas		108,000		69	%			121,000		72	%			(13,000	)		(10.7	)%
Asia/Pacific & Europe		49,000		31	%			47,000		28	%			2,000			4.3	%
Total Active Accounts		157,000		100	%			168,000		100	%			(11,000	)		(6.5	)%
(1) Active Independent Distributors have purchased product in the prior three months for retail or personal consumption.
(2) Active Customers have purchased product in the prior three months for personal consumption only.
(3) Total Active Accounts is the sum of Active Independent Distributor accounts and Active Customer accounts.

LIFEVANTAGE CORPORATION AND SUBSIDIARIES
Reconciliation of GAAP Net Income to Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA
(Unaudited)
	Three Months Ended March 31,							Nine Months Ended March 31,
(In thousands)	2022				2021			2022			2021
GAAP Net income	$	1,141			$	1,724		$	4,536		$	7,987
Interest Expense		5				2			10			17
Provision for income taxes		610				107			1,149			2,768
Depreciation and amortization(1)		838				860			2,443			2,643
Non-GAAP EBITDA:		2,594				2,693			8,138			13,415
Adjustments:
Stock compensation expense		(38	)			668			1,362			2,115
Other expense, net		69				255			385			263
Other adjustments(2)		775				1,184			1,221			2,436
Total adjustments		806				2,107			2,968			4,814
Non-GAAP Adjusted EBITDA	$	3,400			$	4,800		$	11,106		$	18,229
(1) Includes $101,000 of accelerated depreciation related to a change in lease term and $335,000 leasehold depreciation for the nine months ended March 31, 2021.
(2) Other adjustments breakout:
Class-action lawsuit expenses, net of recoveries	$	590			$	645		$	539		$	858
Executive team litigation and severance expenses, net		185				168			651			691
Executive team recruiting and transition expenses		—				371			31			392
Lease abandonment		—				—			—			495
Total adjustments	$	775			$	1,184		$	1,221		$	2,436

LIFEVANTAGE CORPORATION AND SUBSIDIARIES
Reconciliation of GAAP Net Income to Non-GAAP Net Income and Non-GAAP Adjusted EPS
(Unaudited)
	Three Months Ended March 31,								Nine Months Ended March 31,
(In thousands)	2022				2021				2022				2021
GAAP Net income	$	1,141			$	1,724			$	4,536			$	7,987
Adjustments:
Class-action lawsuit expenses, net of recoveries		590				645				539				858
Executive team litigation and severance expenses, net(1)		63				112				529				185
Executive team recruiting and transition expenses		—				371				31				392
Accelerated depreciation related to change in lease term		—				—				—				101
Lease abandonment(2)		—				—				—				830
Tax impact of adjustments(3)		(149	)			(66	)			(238	)			(380	)
Total adjustments, net of tax		504				1,062				861				1,986
Non-GAAP Net Income:	$	1,645			$	2,786			$	5,397			$	9,973
	Three Months Ended March 31,								Nine Months Ended March 31,
	2022				2021				2022				2021
Diluted earnings per share, as reported	$	0.09			$	0.12			$	0.34			$	0.55
Total adjustments, net of tax		0.04				0.07				0.06				0.14
Non-GAAP adjusted diluted earnings per share(4)	$	0.12			$	0.20			$	0.41			$	0.69
(1) Net of $122,000 of compensation expense benefit related to unvested stock award reversals during the three and nine months ended March 31, 2022 and net of $450,000 of compensation expense benefit related to unvested stock award reversals during the nine months ended March 31, 2021.
(2) Includes remaining lease rent expense of $495,000 and leasehold depreciation of $335,000 for the nine months ended March 31, 2021.
(3) Three and nine months ended March 31, 2022 tax impact is based on the projected annual tax rate for the year ended June 30, 2022.
(4) May not add due to rounding.

FAQ

What are the third quarter results for LifeVantage (LFVN)?

LifeVantage reported Q3 FY2022 revenues of $50.0 million, a 3.0% decrease year-over-year, with earnings per share of $0.09.

What is the new dividend announced by LifeVantage (LFVN)?

LifeVantage has initiated a quarterly dividend of $0.03 per common share, payable on May 31, 2022.

How has LifeVantage (LFVN) changed its fiscal 2022 guidance?

The company lowered its revenue guidance for FY2022 to $204-$207 million, down from $212-$220 million.

What is the adjusted EBITDA for LifeVantage (LFVN) in Q3 FY2022?

Adjusted EBITDA for Q3 FY2022 was $3.4 million, marking a 29.2% decrease from the prior year.